Misallocation and the Distribution of Global Volatility

• 成果类型: Article
• 署名作者: Eden, Maya
• 署名单位: The World Bank
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20150314
• 发表日期: 2017
• 页码: 592-622
• 关键词: Comparative statics; financial crises; business cycles; uncertainty; MARKETS; MODEL; RISK

摘要

Decreasing returns at the macro level are an outcome of efficiency at the micro level. When inputs are scarce, an efficient economy carries out only the most productive projects; when inputs are abundant, the economy implements less productive projects as well. This link between decreasing returns and efficiency suggests that mis-allocation can reduce the extent of aggregate decreasing returns. I formalize this connection and establish two main results: (i) mis-allocation amplifies the volatility of output with respect to fluctuations in inputs; and (ii) financial integration amplifies shocks in relatively distorted economies, but mitigates them in less distorted economies.